In a potentially crippling blow to Obamacare, a top federal appeals court Tuesday said that billions of dollars worth of government subsidies that helped 4.7 million people buy insurance on HealthCare.gov are not legal under the Affordable Care Act.

In its decision, a three-judge panel said that such subsidies can be granted only to people who bought insurance in an Obamacare exchange run by an individual state or the District of Columbia — not on the federally run exchange HealthCare.gov. Plaintiffs in the case known as Halbig v. Burwell argued that the ACA, as written, only allows that often-significant financial aid to be issued to people who bought insurance on a marketplace set up a state.

The decision is certain to be challenged by the Obama Administration, and does not immediately have the effect of law. But if it is ultimately upheld, it would cause insurance rates for those people who lost the subsidies to dramatically rise.

HealthCare.gov serves residents of the 36 states that did not create their own health insurance marketplace. About 86 percent of its 5.45 million customers received a subsidy to offset the cost of their coverage this year because they had low or moderate incomes.

In a report issued Thursday, the consultancy Avalere Health said that if those subsidies were removed this year from the 4.7 million people who received them in HealthCare.gov states, their premiums would have been an average of 76 percent higher in price than what they are paying now.

Another report by the Robert Wood Johnson Foundation and the Urban Institute estimated that by 2016, about 7.3 million enrollees who would have qualified for financial assistance will be lose access to about $36.1 billion in subsidies if those court challenges succeed.

Before the decision, a leading Obamacare expert who was firmly opposed to the plantiffs' arguments said a ruling in their favor could have major consequences for the health-care reform law.

"If the courts were to decide that the Halbig plaintiffs were right, it would be a huge threat to the ACA," said that expert,Timothy Jost, a professor at the Washington and Lee University School of Law.

"It's a very big deal," said Ron Pollack, founder of the health-care consumers advocacy group Families USA, and Enroll America, a major Obamacare advocacy group.

Pollack noted that the more than 5 million people who have received subsidies via HealthCare.gov "would have them taken away."

"It certainly would cause a lot of people to rejoin the ranks of the uninsured," Pollack said. "The provision of the tax credit premium subsidy makes a huge difference in terms of whether people considering enrollment or enrolling in coverage will find such coverage affordable."

Last week, two analyses underscored the potential effects of the subsidies ultimately being deemed illegal.

The consultancy Avalere Health said people who currently receive such subsidies in the affected stateswould see their premium rates raise an average of 76 percent.

And the Robert Wood Johnson Foundation and the Urban Institute said that by 2016, about 7.3 million enrollees would lose about $36 billion in subsidies.

On Monday, one of the intellectual godfathers of the argument that is the basis of the Halbig case, as well as three other similar pending court challenges, said that tens of millions of people would be freed from Obamacare mandates in the affected states if the challenges prevailed.

Michael Cannon, director of health policy studies at the libertarian Cato Institute, said more than 250,000 firms in those states—which have about 57 million workers—would not be subject to the employer mandate being phased in starting next year. That rule, which hinges on the availability of subsidies on Obamacare exchanges, will compel employers with 50 or more full-time workers to offer affordable health insurance or pay a fine.

Courts could cause big Obamacare $$$ hike

And if the challenge prevail, a total of about 8.3 million individuals will be "free" of Obamacare's rule that they have health insurance or pay a fine equal to as much as 1 percent of their taxable income, said Cannon, who with law professor Jonathan Adler laid the groundwork for the challenges to the HealthCare.gov subsidies.

Oral arguments heard by a three-judge panel on that DC federal appeals court in March—when two of the judges appeared sympathetic to the plaintiffs—gave Halbig supporters renewed hope that their claim would succeed.
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Halbig was the first of those cases decided at the appellate level.

In the other case that has been heard on appeal, one first filed in Virginia federal district court, the 4th U.S. Circuit Court of Appeals is expected to issue a ruling any day.

However, that circuit is widely expected to rule against the plaintiffs' claims challenging the legality of the Obamacare subsidies on HealthCare.gov.

You do realize the Court isn't gutting anything... they are simply stating the obvious... that the administration has to enforce the law AS WRITTEN and not make up sections that don't exist.

And the other DC court that ruled the opposite way today? The one who took more credence in Chevron vs. NDRC - the ruling that says in cases of wording ambiguity it's up to the program administer to determine the true intent? Do you really think the true intent was to not allow subsidies on the federally-run exchanges?

And the other DC court that ruled the opposite way today? The one who took more credence in Chevron vs. NDRC - the ruling that says in cases of wording ambiguity it's up to the program administer to determine the true intent? Do you really think the true intent was to not allow subsidies on the federally-run exchanges?

Critics of the law, who said the ruling in Washington vindicated their opposition to it, did not have much time to celebrate. Within hours, a unanimous three-judge panel of the United States Court of Appeals for the Fourth Circuit, in Richmond, Va., issued a ruling that came to the opposite conclusion.

The Fourth Circuit panel upheld the subsidies, saying the I.R.S. rule was “a permissible exercise of the agency’s discretion.”

The language of the Affordable Care Act on this point is “ambiguous and subject to multiple interpretations,” the Fourth Circuit panel said, so it gave deference to the tax agency.

My husband and I both work, but neither of us in particularly high-paying jobs (though not minimum-wage types either, we're just not in high-paying fields, as we followed our passions/skills and not our bank accounts into our careers). We pay taxes, and likewise, we pay for our own insurance. However, before the health care law passed, our insurance costs were astronomical enough that we could barely afford them - in the range of $1,000/month. For a period of time, when I moved from one job to another, I was simply uninsured. Now that I have a new job that provides insurance at a much lower cost and my husband and son are on the exchange, we are spending so much less on insurance that we don't even think about it anymore, as a burden or a stress or anything. It's just like any other bill. Everything in our life has improved by taking some financial stress away. And there's no reason for us to be without insurance when it is so affordable. This law is imperfect, but it is a very good thing, and if you look at the pay range for families that it covers (up to $94,200 for families of four) you would realize that the people it helps aren't exactly "takers". We are building a better society by taking care of each other, that's what taxes are for in the first place, and why we pay them.

This is what a lot of you on this forum just don't get. There are real working people like this whose lives have been vastly improved under Obamacare. It's why your leaders have slowed way down on the repeal talk and are moving on to other issues. They know Obamacare isn't nearly as unpopular or the disaster they predicted, and they have no ideas of their own to replace it with. Which of course they knew all along. That's why they fought it so hard.

As a lot of us on here predicted - if they lost at this stage in the game they would just quietly move on. They know a large portion of the country wouldn't be affected at all, but some will be really helped.

Republicans know conservative media will be more than happy to distract the base a new set of shiny keys from the endless well of *minorities taking your hard earned money*. Eventually everyone will just accept Obamacare like they do now with SS and Medicare. 20 years from now they'll probably be running scare campaigns: "Democrats are coming to take your Obamacare!" like they do now with Medicare and death panels. Sorry for you true believers on this forum who actually believed all the propaganda. But you'll forget about it soon enough.

This is what a lot of you on this forum just don't get. There are real working people like this whose lives have been vastly improved under Obamacare. It's why your leaders have slowed way down on the repeal talk and are moving on to other issues. They know Obamacare isn't nearly as unpopular or the disaster they predicted, and they have no ideas of their own to replace it with. Which of course they knew all along. That's why they fought it so hard.

As a lot of us on here predicted - if they lost at this stage in the game they would just quietly move on - knowing conservative media will be more than happy distract the base a new set of shiny keys. They knew a large portion of the country wouldn't be affected at all, but some will be really helped. Eventually everyone will just accept Obamacare like they do now with SS and Medicare. 20 years from now they'll probably be running scare campaigns: "Democrats are coming to take your Obamacare!" like they do now with death panels. Sorry for you true believers on this forum who actually believed all the propaganda. But you'll forget about it soon enough.

This is one of those people I want dying in the streets after she's been refused health care at the emergency room.

Alternatively, I want her paying full price for her insurance so she has some skin in the game.

Her choice. Either way is cool with me.

Actually, there's a third way I'd settle for. She could beg for charity from a private organization and be damned grateful if and when she gets it.

Luckily most Americans are a lot more compassionate than you. Also many of us are not so short-sighted and jingoistic that we are able to look at other developed countries for far better examples on how to handle public health care. Most other countries don't think someone like the woman above should get the shaft her entire life because she wasn't lucky enough to be born totally healthy.

Oh and my life has not improved under Obamacare. I lost my policy. Granted it was replaced at $2000 more a year and some lost benefits and higher deductible. So don't give me some crap about someone who paid too much before.

Luckily most Americans are a lot more compassionate than you. Also many of us are not so short-sighted and jingoistic that we are able to look at other developed countries for far better examples on how to handle public health care. Most other countries don't think someone like the woman above should get the shaft her entire life because she wasn't lucky enough to be born totally healthy.

And the other DC court that ruled the opposite way today? The one who took more credence in Chevron vs. NDRC - the ruling that says in cases of wording ambiguity it's up to the program administer to determine the true intent? Do you really think the true intent was to not allow subsidies on the federally-run exchanges?

Yes it was the intent and the letter of the law. It was designed as an imposition on the states.

What you're defending is intepretation by judges while actually ignoring the letter of the law which is NOT ambiguous. This is what progs do. I posted about this a long while back. This glitch in the law was known about and would be its downfall.